Cost-of-Health-Care News

We all have the right to live long and healthy lives, without breaking the bank. Unfortunately, our current health care system is overly complicated for everyone. We need more transparency.

To bring attention to this issue, cost-of-healthcare news is keeping an eye who pays how much for what -- and why -- and keeping you informed.

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Issue No. 34: Are ICER and the QALY the Right Way to Manage Access to Life-Saving Medicines?

CVS Health, parent company of CVS Caremark, one of the three giant pharmaceutical benefit managers (PBMs), issued a white paper in August that addresses ways of “making drugs more affordable.” There’s little doubt that one purpose of the paper is to deflect widespread criticism of PBMs from federal and state governments and the media. Among the measures the study cites are increasing the use of generics and requiring prior authorization for more medicines. The study also defends PBMs against what it terms the “myth” that their opaque system of rebates is causing prices to rise. These are ideas and assertions the PBMs have raised many times in the past.

Toward the end of the paper, CVS Health brings up three new strategies for Caremark to constrain costs. One of those immediately ignited controversy. The company announced that it was starting “a program that allows clients to exclude any drug launched at a price of greater than $100,000 per QALY from their plan. The QALY ratio is determined based on publicly available analyses from the Institute for Clinical and Economic Review (ICER), an organization skilled in the development of comparative effectiveness analyses.” At this stage, the CVS program gives clients the option of participating or not, and it excludes “medications deemed ‘breakthrough’ therapies.”

In coordination with ICER, an organization funded in large part by a foundation with a reputation for aggressive, ideological positions, the health-insurance industry is attempting to make a major change in the access afforded patients to innovative medicines.

As further evidence, in a July 16 comment letter to HHS Secretary Alex Azar, responding to the Trump Administration’s “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” the Pharmaceutical Care Management Association, a trade group for PBMs, stated:

To achieve a reasonable level of pricing, the drug could be examined for value by a credible body that would estimate a reasonable range of price for a given drug, based on the value it is expected to bring to patients. One such entity is the Institute for Clinical and Economic Review (ICER).

In a similar comment letter, America’s Health Insurance Plans, another powerful trade group, stated:

We also support CMS in conducting demonstrations to hold manufacturers accountable for outcomes. However,…the demonstrations should explore the potential benefits of an independent entity such as the Institute for Clinical and Economic Review (ICER) that would provide an objective assessment of value for drugs that exceed a certain price threshold.

But is ICER, or any other analyst, really ready to provide such an objective, independent assessment of value? The value framework today seems almost crude – rife with error, myopic, and often biased.

READ MORE HERE

What Others Are Saying

"The anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs."

- Michael Mandell of the Progressive Policy Institute (PPI):

"Even if pharmaceutical spending were rising as a share of total health care spending, but that rise was due to pharmaceutical investments driving down expenditures in other health care areas (e.g. a reduced need for more expensive surgeries), then it would still be inaccurate to argue that pharmaceutical spending is driving overall health care inflation."

-Wayne Weingarten of the Pacific Research Institute